tv Worldwide Exchange CNBC June 10, 2013 4:00am-6:01am EDT
you're watching the first "worldwide exchange" of the week. the nikkei closes up nearly 5%, the biggest gain many more than two years boosted by better japanese gdp data although european stocks have failed to follow. chinese economic growth stumbles amid inflation data has put its 7.5% annual growth target at risk, but can they afford to do anything about it? the turkish stock market falls despite a warning from the prime minister that he will choke financial speculators as his patience with protests is running out. india's government promises future steps to curb volatility
as the rupee hits a new record low. and foming forward, a former cia employee says he's the source behind the information of the u.s. government's top-secret surveillance programs. you're watching "worldwide exchange," bringing you business news from around the globe. okay, we're up and running into a fresh new likes it.
why t-mobile helps in the battle to take over sprint. we'll get a preview of the apple development conference and find out why it's all about the music. that's what's coming up. if you've got thoughts, comments, questions, anything you like, e-mail us, email@example.com. firstname.lastname@example.org. we have news out concerning deutsche telecom. i'm not quite sure what it is. sorry about that. there we go. they say around 38% of shareholders have accepted a share dividend. and they're making a cash payment of 1.8 billion euros. now, as far as the nikkei was concerned, a strong session
today. up nearly 5%, better than expected data. it's the highest percentage gain since march the 16th. joining us is nathan sheets of citi. thanks for joining us. there's been a bit of a question mark around abeno. abenomics. how much of a question mark do you have over whether it's going to work? >> well, i think that the boj has firmly committed. and the boj is moving aggressively to try to defeat deflation and achieve its 2% inflation target. but then there's the third arrow of abe's program which focuses on the structural reforms. and honestly, we have to wait until after the upper house elections to see how vigorously abe plans to pursue structural reforms. and i think that that's the source of the volatility in these markets. is he going to do it or not?
>> is the third arrow, as it's called, the most important part of the plan? >> ultimately, the answer to that is yes. and that's the grand irony in all of this, is this is what governor shirakawa was saying, japan needs structural reforms. and he was absolutely right. now, the monetary can be very monetary and helpful, but the key question is what's he going to do at through this
period. so i don't think that this is a question about the fed. it's a question about prime minister abe and how committed he is to reforms. >> nice to have you on. plenty more to get through. now, the second-guessing on china's economy, weak data shows mainland growth is stalled led by trade figures. consumer inflation slowed with producer prices weakening even further. the silver lining in the data, industrial output and retail sales met expectations. let's get more from beijing. eunice is with us. how are you interpreting all of this? >> reporter: well, the way i'm interpreting this is that we're seeing a lot of stagnating growth. all of the numbers are really pointed to that. you mentioned the trade data, the export numbers were looking pretty bad. growth of 1%. also -- and this is with the u.s. recovering as a backdrop. on top of that, the import data was quite bad, missed by a margin, really suggested that the domestic demand is sluggish.
also, the consumer prices and the producer prices are showing quite a bit of weakness. and with the producer prices, this is interesting because it indicates that there's overcapacity still in the system. the bank lending numbers also weren't great, showing that there's some weakness. so it really all just suggests that we're going to see even slower growth in the second quarter. now, this, of course, is leading to a lot of questions. what's the government really going to do about this? and what i think is quite interesting here is what the government isn't doing about it. because over the past couple of days, the government economists at certain think tanks have been saying that this particular con?
thing, though. i don't think the chinese economy in may just fell off the cliff. sure, the recovery is losing momentum for sure. we have lots of concerns about the economy. let's not forget, there were a lot of discussions and controversy around the trade data for the first few months of the year. now, after the chinese governor cracking down on fake exports and imports number, all of a sudden we start to see sort of 0% or plus/minus 1% growth for export/import. so by and large we think the economy's gradually softening, but nothing dramatically has changed in the month of may. >> yeah. nothing dramatically changed in the month of may, but you're cautious, but you're still cautious about the economy. how much can we actually trust the data? >> yeah, there's always a low level of transparency in some of the economic data out of china. and as you may recall in the month of april, the trade data
export and import were both up midteens which was highly unlikely to be anywhere close to the truth because poor companies have been telling us that the export/import-related growth rate year to date has been more like 3% to 5%. so maybe somewhere in the low single digits is closer to the true trade number for china. but what china needs just like your guest earlier said for japan, china also needs structural reforms. the difficulty is in china, the investor interest parties, they are so vast and powerful. it's very hard for them to get a lot of things done. >> you mentioned, nathan, who was speaking earlier, do you agree that the vested interests are, you know, a big impediment to structural reform? >> i think at the end of the day what china needs is more
consumption and less reliance on exports and heavy industry. and i think that the heavy industry is very politically influential there. so i would broadly agree. but then the second thought is, i think china is in the midst of a very important rebalancing process. and i think it's something that's going to take years and years, not months. and the future, i expect china to continue to grow. but 10% growth, probably even 8% or 9% growth is something of the past. and i think all of us need to acclimate ourselves to a klein knees economy that's growing around 7%, but we'll learn that that will be a powerful expansion to the economy. >> how tricky is this rebalancing going to be? and what policies are we going to get, if any, over the next few months?
>> the number of reforms that are needed, the chinese government leaders are very smart people. they know exactly what to do. but the problem is that it's pretty darn difficult for them to do a lot. there are a few areas that we're looking for doable reforms for the rest of the year. for example, in the areas of renewable energy. environmental protection because that sort of benefits the majority of the society including the leaders themselves and touches somewhat less -- fewer vested interest to parties. >> all right. >> and we're also looking for reforms in the financial areas as well as the income redistribution. >> all right. thanks for that. good to see you today. joining us in hong kong. trade weighted to the upside, 6-3, the dow jones stocks, ftse 100 down 2.6% last
week. pretty flat at the open, just down 3 points. we are firmer in the rest of europe, in the eurozone, the dax up 0.75%. ftse fairly flat at the moment. take a look at bond yields, see where we stand in a second. sectors, meanwhile, it was interesting, you'll notice that basic resources are the weaker sector. that is undoubtedly where the impact of the chinese data. actually fairly flat at the moment. and commodities as well very much in focus on the back of chinese data. copper's a little bit weaker. gold steady, but it is below 1400. we did see posted jobs number. the dollar's rebounded a little bit. oil had climbed up. nymex, 99.59. on the currency and bond markets, this is where we stand.
treasury yields, 2.16% have nudged a little bit higher. on the currency markets, 94.98 is where we got down to on friday. the april 4th low, 98.52. so we have rebounded somewhat there. aussie/dollar continuing to weaken. chinese domestic demand, down 0.75%. 1.5512, but it rallied nearly 4 cents last week. that's where we stand in european trade. let's get the latest on that asian session. it's been a while. lisa is back with us. good to see you. >> yeah, good to see you, too. and good to be back to work. as for the markets with china and australia out for public holidays, japan took center stage today. and that 5% gain there snapping a three-day losing streak. it was helped by a pullback in the yen and that upward of
japan's q1 gdp. also, surplus data and bank lending numbers all signal that a steady recovery is happening for the japanese economy helped by abenomics. while investors are eyeing the boj meeting, we see gains in exporter stocks. sharp shares skyrocketed over 15% today. automakers higher as well. toyota gained over 8%. and the beaten-double financial sector also got a lift. nomura holdings gained over 6% today. elsewhere for the rest of asia, gains were capped by that poor china data. in the absence of the mainland markets, shares in hong kong added modest 0.2% today. mainland technology shares lent support such as lenovo. it showed weakness with the index, down almost 1%. that on expectations of profits.
meanwhile in south korea, the kospi closed higher by 0.5%. samsung electronics failed to hold on to its early gains, shedding by about 0.1% after the 7.3% loss over the past two sessions. but shipmakers, back on track of a rally, rebounding a strong 5%. that's all from me. back to you. >> good to see you. catch you a little bit later. talking about deutsche telecom earlier. just a correction on that. it wasn't 38% of all shareholders. it was 38% of those shareholders with voting rights had accepted the share dividend. to turkey, trading in its financial markets has been pretty volatile ever since anti-government protests broke out may 31st. following a delay this morning, it's down over 2.3%. the prime minister faced cheering supporters and vowed to cheek financial market
speculators. he also urged turks to put their money in state, not private, banks. and standing firm against the demonstrations, he says they have limits and it will not force him to give up power. we'll find out more about the threat against market speculators on our website. also, the former south african president nelson mandela returned to hospital over the weekend due to a recurring lung infection which prompted an outpouring of support from across the country. officials have described the 94-year-old's condition as serious but stable. joining us with the latest from johannesburg, nbc's keir simmons. hi, keir. >> reporter: good morning, ross. this is the fourth time that nelson mandela has been in the hospital since december. but it is the first time that his doctors have described him as serious, though he is said to be stable and able to breathe independently. over the weekend, some of his children and grandchildren were seen entering the hospital in pretoria where it's thought he
is being treated for that recurring lung infection. and his daughter was seen leaving later, smiling. all the same, since he was rushed to the hospital in the early hours saturday, we have had no news from his family or from the government of any improvement, that it is being reported today that only people very close to mandela are being allowed into the hospital to give him space for a recovery. one longtime friend of his, andrew, is saying in a newspaper, quote, that it is time to let nelson mandela go. but, of course, people have seen him go into the hospital and return him to his home in joe nan hessburg on a number of occasions. and people across this country are hoping and praying that he does the shaame this team. >> keir, thank you for that. former cia employee claims he's the source who leaked details of the national security agency's top-secret surveillance programs to britain's "guardian" newspaper. edward snowden was a technical
assistant and says he worked for the nsa in hawaii as a consultant for alan hamelton. he left the u.s. for hong kong may the 20th. snowden says he leaked the information on the nsa's prison program after becoming disenchaptered with president obama who he says continued the policies of george w. bush. >> i'm just another guy who sits there day to day in the office, watches what's happening, and goes, this is something that's not our place to decide. the public needs to decide whether these programs and policies are right or wrong. and the rupee has hit an all-time low against the dollar. after the break, we'll number mumbai to find out what's going on. see you in a few moments. we went out and asked people a simple question:
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well, the indian rupee hit a record low earlier. right now it's at 57.71. most of the pressure coming from the strength of the u.s. dollar. analysts say the deficit is also a big concern. the chief economic adviser rajan said the government will take steps to minimize the rupee's volatility. let's get more from mumbai. hi, sonja.
>> reporter: hi. thanks for that. well, it is the biggest talking point here, the way the rupee has hit an all-time low like you pointed out. now, if you match the trajectory from the start of may, it's been a 6% fall for the rupee since the start of may itself. and you know, if you map it in the last two years, the rupee has fallen 30% since july 2011. now, when you speak to experts, you get a sense that the rupee depreciation is in tandem with all of the emerging market currency depreciation. so it's not really a standalone factor because of the macro economic concerns in india, but it's in general the slowdown we've seen in emerging market currency as cross the board. and that is the reason why the reserve bank as well as the chief economic adviser has come out and said the bank will not aggressively try to stem the fall of the rupee because it seems to be a larger problem. it's an emerging market
currency. also, because of the rupee's weakness, we are seeing quite a bit of redemptions from the foreign investors in the debt market. so if you look at it from the start of the month of june, $1.5 billion of debt has been redeemed by foreign institution, fearing that the rupee could hit lower levels and the valuations could recede as well. all in all, it's chaotic in the indian markets because of the way the currency has moved. a lot of these companies that have high amount of dollar debt are reeling under pressure because payments will go up for them. back to you. >> thanks very much indeed for that. nathan, we said in the introduction actually part of this is just because the dollar is stronger. just look at the implications of a stronger dollar, for emerging market investors and who have been driven into, of course, a hunt for yield. >> yes.
so my feeling is that the stronger dollar, its counterpart is weaker emerging market currencies. and global investors see this. and they're expecting further dollar appreciation. they're expecting the u.s. equity market over time to likely trend higher. and the relative attractiveness of emerging market assets relative to u.s. assets is diminishing. and i think we're starting to see that. and then you layer down on top of that some uncertainty about china and global commodity markets and so on and so forth. and it's an equation that leads to a fair amount of questions about the emerging markets going forward. >> yeah. money potentially coming out of the emerging markets and where would it end up? not necessarily the u.s. bond market, but i don't know. >> right now when i talk to global investors, the one asset that is almost universally loved is u.s. equities. >> right. >> and i really think that
that's the next leg of devolvements in financial markets is a movement from emerging markets and probably to some extent from u.s. bonds into u.s. equities. and i don't expect it to happen over the course of a week or two, but i would say over the next 6 to 12 months, i think that's what we're going to see. >> if you're a fixed income, i don't i don't know what you're supposed to do. >> a 30-year bull market in bonds. and it's looking like that bull market may be coming to an end. >> all right. nathan, now, thank you. now, apple is expected to launch a streaming music service. at its worldwide development conference today. according to reports, iradio. apple has already signed licensing deals with warner and universal music groups. pandora traded down 11% last week on iradio rumors. meanwhile, a new study
suggests that if you want a good night's sleep, it's best to keep ipads and smartphones out of the bedroom. apparently reading them before you go to bed stimulates melanoma or doesn't, whichever way around it is. we want to know, is your bedroom a tech-free sanctuary? let us know. join the conversation. e-mail email@example.com. it's pretty hard, nathan, isn't it, not to have the phone or the blackberry next to you? >> i have to say that i succumb to the temptation. i'm a late-night reader. >> they say that's the worst thing. >> i want to sleep better so maybe i'll give it a try. >> don't read e-mails literally after you get into bed. especially for like an hour before you get into bed. that's the advice, folks. still to come, italian premier faces a public vote of confidence in a fiercely contested local election. after the break, we'll number rome for the latest as polls reopen.
improved japanese gdp data. european stocks are also moving modestly firmer. chinese economic growth stumbles lending in inflation data putting its 7.5% annual growth target at risk. but can the pboc afford to do anything about it? turkish stock market falls at the open despite a warning from the prime minister that he will choke financial speculators as his patience with protests is running out. india's government promises future steps to curb foreign exchange volatilities. the rupee hits a new record low against a stronger greenback. european stocks -- the dax is doing okay. elsewhere we're pretty flat, really. that follows a down week for the ftse last week, off 2.6%. bond markets yields today were above 2%. treasury yields around 2.16%. italian yields a little higher
at 4.21%. and on the currency markets, dollar/yen hit 94.98 on friday. 98.20 is where we've been this morning. again, a little bit firm. euro/dollar steady. it had a good week last week, up over nearly 4 cents. right now slightly weaker at 1.5507. tensions between north and south korea appear to be easing. on sunday, officials from both countries met in the border village to prepare for high-level talks on wednesday. on the agenda, the possible reopening of the kaesong industrial complex which was closed earlier this year. with pyongyang's nuclear discussions are not expected to be up for discussion. the two koreas haven't held talks in two years. for more we're joined by sherry kang in seoul. hi, sherry. >> reporter: hi, ross. good to see you again. you can think of it as north korea's exit strategy maybe from the new lows and the two koreas'
relations we saw earlier this year after north korea's nuclear and missile/rocket tests. now, since the memorial day holiday here last thursday, the two koreas have put on quite a dramatic change, pretty speedy in their going back and forth, and now they've agreed on when and where for this dialogue which is starting this wednesday, like you said. for you, items, if you look at the items on the table, like mentioned, resuming operation at the suspended kaesong industrial complex, this is why some are calling it north korea's exit strategy, because these have been two of its major cash-making projects that have pursued with the south. the kaesong complex, for one, brought some 90 million u.s. dollars to the north korean government directly every year. but is it going to be an all-out smooth ride from here on? it certainly doesn't look like it. when and where it happens is set
for now, but they are still not on the same page as to who will lead the talks and specifically what will be discussed. do note, though, like you mentioned, the talks won't include north korea's nuclear program, for example. so the dialogue this time is simply one sign of a thaw in their relations, but whether it will be a breakthrough remains to be seen at this point. ross, back to you. >> all right, chery, thanks for that. let's get a final thought from nathan. just before you go, your view, posted jobs number friday and fed and tapering. >> my sense is that the u.s. economy is gradually recovering. we're seeing this in the housing market, in the consumer data, and we're also finally seeing this in the labor market. so i think the news is moderately positive. and what the fed's doing is the fed's going to wait and see whether this recent improvement in the labor market is sustained. and specifically, i think what the fed is looking for over the
next few months is those jobs numbers approaching the 200,000 level. and as that happens, then i think the fed will likely begin to taper in september. >> does it matter if the unemployment rate goes up because the labor force has gotten bigger, or not? >> on balance, i think the fed would consider that good news, not because of the unemployment rate going up, but the fact that we're finally starting to see some of these discouraged workers have enough confidence to get back in the labor force and start looking again. >> all right. nathan, good to see you. thanks very much for joining us. have a good week here in london. nathan sheets, global head of economics at citigroup. we have news out of france. this according to "le monde," the french newspaper. all part of a probe on the t tapie. stephon has the very latest for
us on this. stephon? >> reporter: yeah, he's in custody this morning and being questioned by magistrates. they want to know why christine legard tried to settle a long legal battle between a controversial businessman and the french states. the arbitration process led to a 402 million euros being paid to bernard tapie in 2008 and basically magistrates want to know if christine legard, if she was instructed to do so by nicolas sarkozy, former french president. bernard tapie was one of his supporters at the time. basically they want to know if the decision was on legal grounds or if it was a favor to a friend of bernard tapie.
legard was questioned in france as a former minister. and this morning the currency is being questioned and has been placed in custody. of course, for the time being, shares are trading a little bit lower. they are down 1%, ross. >> meanwhile, we've had comments out from francois hollande. what does he think it's done to the eu? >> well, certainly the crisis isn't over. if you look at the fundamentals, we are in france at record level in terms of unemployment. hollande won't manage to reverse the trend by the end of the year, as he was promising. the french economy, as you know, entered recession in the first quarter of this year, and most economies believe that the french gdp would be more or less flat this year. so it's probably too early -- far too early to claim victory
even if you want to attract foreign investors. however, ross, hollande is probably right when he says that thanks to the crisis, the eurozone will become stronger. it has conducted some structural reforms and fiscal consolidation. and this weekend in japan, hollande explained that europe has become more stable and now must work on the new outlook. >> translator: we must create a new outlook, an outlook for growth and employment. together with germany, we are trying to establish new goals beyond fiscal discipline. france and germany together are trying to address unemployment, particularly among the youth in order to restore europe's competitiveness. >> of course, francois mentioned the trade dispute between europe and china. it's up to us to be more competitive, explained the french president, and to convince the chinese that there can be reciprocity, speaking at a conference with business
representatives. hollande says the french goal was to sell more products to china, but there were needs for clear ground rules and more cooperation on both sides. hollande rejected accusations of france and europe being protectionist. >> translator: i do not fear at all the opening of markets. rather, i think open markets encourage growth. there are certain conditions. it must be mutually beneficial and fair. i plan to play a central role so that japan and europe can conclude epa talks because i think it will be beneficial to the economies of europe and japan. >> so ross, i hope you got the message. france is not protectionist. and the crisis is over. o oohlala. extraordinary. what does one do? what does one do with that information? catch you later. thanks for that.
the ecb's reportedly denying weekend speculation, meanwhile, that it has set a limit of 524 billion euros on any potential intervention to assist eu countries in need under its outright monetary transaction scheme. according to reuters citing an ecb spokesman, no limit has or will be set. meanwhile, starting tomorrow, germany's constitutional court is going to consider claims that the ecb is overstepping its mandate with the omt plan. at the same time, the imf is pushing eurozone nations to allow greece further debt forgiveness to plug a projected financing gap of 4.6 billion euros next year. this according to deshpiegel online. meanwhile, we understand nelson mandela still in hospital and is still pushing on the
change from saturday, still has a serious lung complaint, but he is still stable. the italian prime minister is hoping to restore his party's popularity with rivals on the center-right. the focus would be on the city of rome. his party's candidate is running against the incumbent party. prime minister letta is looking to promote support. james wilson is professor at the american university of rome. and joins us for more. james, thanks for joining us. what will this tell us about support for this coalition? >> well, the most important thing which we can say already now unless things change extraordinarily between now and
3:00 in the afternoon is that people are not interested. it's gone down dramatically even from the first round a few weeks ago. italians used to vote very seriously and they used to vote for national elections well over 80%. last february it was the mid-70s. two weeks ago at local elections, it was down to almost half. and it seems to be rather lower than that. and in the sense that it is good for mr. letta because it means that there is not too much rivalry between his supporting parties, he's from the center-left, as you said, but he's also supported by the center-right. and if the two mayoral candidates here in rome are really at each other's throats, that would cause divisions within his government, and that hasn't happened so much. his desperation is to keep these two parties together. and that he's got to do. and he's succeeding so far.
>> how much of a problem is there for anybody in italian politics at the moment, james, in terms of standing up to you being seen in the public's eye to stand up to what the rest of europe needs and wants from italy and also whilst delivering what europe wants and needs from italy? >> well, letta has managed that game rather well. within days of being apointed, he was sworn in on the 28th of april. on the 30th, he was already seeing significantly -- chancellor merkel and then president hollande and then barroso. the three major european leaders in three days, trying to get their support. he needs their support. they need his support. there is an alliance, certainly a communion of interests, between france and italy, which has been shown. it was shown before. and letta has made it very clear
that he wants to go for growth. he wants to leave the monti government's austerity package behind. and that way he's with hollande, as your last piece showed. >> meanwhile, where are we with grillo? there seems to be internal divisions in the five-star movement about his rather autocratic leadership style. have we seen the best of the support for the five-star movement? >> at the moment, there is -- there's a sort of race to the bottom with the three main political parties. the two parties in government have desperate divisions in them. and they will continue to be there and will come out over the next six months or a little bit more. but grillo is at the moment showing his divisions even more. last week we saw the first two people leave the movement, the first two parliamentarians leave
the movement. grillo is trying to exercise quite a lot of damage control. he is now trying to spin his message better, put his message across better. his best allies are the two main political parties. because the more they mess up, if they mess up, the more they don't seem to recognize the needs of the italian people. the fact that they don't recognize that the italians want to cut costs of politics, want to introduce reforms. the more that grillo will be able to maintain his position. but he does have to organize because you can protest as much as you'd like, but uns you're in parliament, you have to follow procedure. you have to table motions, put down bills. it all gets rather tedious. and grillo and his people are not good at negotiating. if they can't learn, then they're toast. if they can learn, they will be in a very strong position when the elections happen fairly soon.
>> james, good to speak to you. james wilson, professor at the american university of rome. we have some more news out of turkey. the economics minister says the first quarter gdp won't be so good. the economics minister says industrial output should rise to reach 4% of gdp. but the actual number won't be that great. the 100 has been down, currently down 1.7%. now, if you've got any thoughts or comments, e-mail us. still to come, could china be gearing up to get tough on european reports on the auto sector or not? we'll look at that as soon as we're back. i want to make things more secure. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases.
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a couple of bits of news just to bring you up to speed top iran's guardian council set today not considering barring any presidential candidate days before the june 14th vote. that is a contrast to earlier media reports which said it was reviewing the candidacy of the cleric. they say further review of the qualifications have not been raised, and we deny such a
thing. there's also a company involved in tax evasion according to sources. police have discovered 20 million euros in sardinia. those according to these reports. i can't see which news wires has come up with it. anyway, they say a source. it's a company controlled by glencorps, although that's totally unsubstantiated at the moment. reports the firm is in talks with deutsche telecom. we have more from tokyo. hi. >> hello, ross. soft bank is hoping its $20 billion for sprint will be approved by the company's shareholders. but since dish made a higher counteroffer, things have been
looking increasingly unclear. soft bank is now known to be in talks with deutsche telecom which owns 74% of t-mobile usa. since this fallback plan surfaced, market watchers say it's become less likely soft bank will raise its bidding price. now, the news was welcomed by the tokyo market as a reassurance of the firm's resolve which sent stocks soaring. so all eyes will be on the outcome of wednesday's sprint shareholder meeting. that's all. back to you, ross. apple's annual worldwide developers conference opens today in san francisco. ceo tim cook giving the keynote address. he's likely to unveil the ios 7 software. it's expected to be less glitzy and offer more social interaction with sites like flicker. he may also show off the desktop software. i get very excited about software and could unveil the
iradio streaming music service. . ale reportedly signed the deal with companies on friday. it's also possible there may be a refresh of the macbook and mac power air. ahead of all of this, apple stock mildly high, up 0.6%. now, earlier we asked you if you kept your bedroom a tech-free zone. john tweeted this 1:30 a.m. local time. he's watching whilst tweeting #shouldbesleeping. are you watching it on an ipad or some other mobile device? keep your responses coming. john, get some sleep. e-mail us, firstname.lastname@example.org or @rosswestgate. european auto industry association aca says it's investigating reports that china might impose antidumping duties on some imports. this is after a complaint was reportedly filed with china's ministry of commerce last week over premium cars being sold at
a loss in the asian market. the potential trade fight comes at a time when european manufacturers are looking to expand in china and offset a regional slowdown. joining us with his thoughts, mike tindal, director of research at barclays. mike, thanks so much for coming in. when we look at the latest sales for april, the audi sales up 13%. bmw sales up 11%. how serious is the threat of some kind of antidumping -- so-called antidumping embargo? >> yeah, i mean, i guess it's not good news on the surface, but if you actually look a bit deeper, most of the carmakers are localized to some degree in china. it's probably not as bad as it might first appear. the problem, i guess, is when you think about imported cars to china, it's the top end. it's the most lucrative cars that are actually the ones that are likely to be hit. >> yeah, there was this report, two liters and above which
pretty much puts it in nearly all the luxury guys, i would think. >> yeah, exactly. but also, when you think about imported from europe, we're talking about 7 series, 6 series, bmw, mercedes "s" class. it's the very top end, if you like. >> this isn't the only threat. we have had -- there was a threat from governments or government authorities being told they couldn't buy foreign cars. i'm not sure whether that's filtered through. >> yeah, it came through in the middle of last year. i think there is a move by the chinese government to support local industry. and to that degree, the foreign car dm ma carmakers have been compelled to localize. they are protected if you take someone like volkswagen, last year they produced 2.6 million cars in china and sold 2.8. so they are essentially a chinese carmaker anyway. >> yeah. so what is the trend going to be? because there's also this trend
as well about less conspicuous consumption. so what is the outlook this year for these guys overall compared to last year? >> so i think overall, it's not too bad. as you pointed out, to the end of april, premium cars are up 13% in china. for audi, at least. overall market looks like it's growing reasonably healthy for them. it's the top end in the first quarter bmw's imports were down 18%. and that seems to be stemming from this, you know, this move against conspicuous consumption. so we think the top end is at risk. the point, i guess, we would make is it's -- you know, it's probably about 8% of bmw's profits. it's a fairly smallish portion. >> yeah. what's interesting here is the three german, audi, bmw, mercedes, as i understand it, have 70% of the premium market, this extraordinary share. who else is going to challenge that? >> i mean, that's a great
question. i mean, i think it's similar around the world. i mean, those three big germans are continuing to take share in the u.s. i mean, they pretty much own the european market. i think everyone has premium aspirations, but particularly in somewhere like china where they're particularly brand conscious, the heritage associated with those brands, they're in very good stead. it's difficult to perceive anyone really tackling them at this point. >> yeah, which is a fair point. diamond has a price target of 30%. out of these three, mike, who from an investment point of view -- and i don't know how much china sales matters compared to u.s. sales. maybe it's sort of 50/50. but out of these three, what's got the best investment case? >> i mean, for us, it's volkswagen. it's a combination of preed ymi
audi in the cost space and then, of course, you've got their much hailed platform which is coming in this year. so for us, the earnings growth projection there versus valuation, that's definitely the top pick of the three germans. >> all right, mike, good to speak to you. thanks very much indeed for that. mike tindall, analyst at barclays. more europeans have reportedly been taking up mandarin in a bid to tap business opportunities. but recruitment firms are warning people not to bother saying attempts to become fluenter are a waste of time. find out more on our website, cnbc.com. a reminder what's on the agenda tomorrow in asia, whether you're wondering to learn mandarin, the bank of japan concludes its two-day policy meeting. the governor kuroda will hold a press conference at 6:positive gmt. malaysia central bank also slated to hold its review. most expecting interest rates to stay steady at 3%. and over in india, watch out for trade data for may.
that's what's coming up tomorrow. still to come on today's program, the french president francois hollande has announced the end of the european debt crisis. yeah. so is it now time to revise the portfolio and wait on the good times? actually, good times haven't been affected by the eurozone debt crisis. the dow up 15%. we're going to talk strategy, the impact on global markets. the next hour of "worldwide exchange" continues right after this very short break. see you in a few moments.
this is "worldwide exchange." the headlines today. the nikkei closes up nearly 5%. the biggest gain in more than two years. boosted by better japanese gdp. european stocks, they're lagging a little bit, hit by weak trade data out of china. turkish stock market's down again today despite a warning from the prime minister that he will choke financial speculators. his paris with protests is running out. also coming forward, a former cia employee says he's the source behind the leak of information on u.s. government's top-secret surveillance programs. and the ceo of french's orange
has been taken into custody for questioning over his role in an arbitration scandal which saw businessman bernard tapie receive a large payout. you're watching "worldwide exchange," bringing you business news from around the globe. >> okay. a warm welcome to the start of the trading day. as far as futures are concerned, you saw we are weighted to the upside a little bit. as far as futures are concerned at the moment, the dow is currently about 22 points above fair value, up 0.9% for the week last week. the s&p up 0.8%. it is currently about 3 points or 2.5 points up, up 4% last week. it is currently some 3 and a bit points above fair value. the nikkei today was up nearly 5%, rebounding after we saw the
yen eventually start to weaken a little bit after strong gains it's made against the dollar. the dollar weakening as well. as far as the ftse global 300 is concerned, this is where we stand. meandering along, just up 5%. the ftse 100 last week down 2.6%. today it's been fairly flat to negative. just off one point at the moment. the dax up 0.75%. the ftse is down 0.10%. on the bond markets, just take a look at treasure y yields. 2.16%. on the currency markets, all that focus on dollar-yen. on friday we got down to 94.98. right now you see we've rallied back up. the dollar is a little stronger across the board. aussie/dollar, 94.31. we got down to 93.93, which is a 20-month low. the weak chinese data, we'll get
into it, trade data, weaker -- suggesting consumer weaker as well. sterling off to a pretty good week, up nearly 4 cents. weaker today at 1.5527. euro/dollar steady. that's where we stand now. let's recap that asian session. li in singapore. >> reporter: thank you, ross. china and australia markets were shut for public holidays today, but there is still plenty of action here in asia. japan staged a big bounceback, up nearly 5%. sentiment got a lift from that better than expected u.s. jobs report. at home, we also got an upward revision of japan's q1 gdp and strong bank lending numbers. there was also confirmation that the country's biggest pension fund is buying more domestic stocks. japanese exporters were among the biggest gainers as investors swooped in to pick up recently beaten down stocks.
sharp shares soared over 15%. automakers on the bottom row also gained momentum. toyota, honda and nissan gained between 4% and over 8% today. and in south korea, the kospi closed 0.5% higher thanks to a rebound in technology stocks. were between 3% and 5%. but samsung electronics still finished marginally in the red after a 6% loss on friday. elsewhere, the underperformers today, hong kong's property counters, stocks were sold off after a top hong kong official said more terms will be imposed if property prices don't fall at least 20%. that's all from me. back to you. >> thanks for that. the japanese rebound followed u.s. jobs data that was solid, not necessarily strong enough to trigger worries over tapering of federal reserve stimulus. let's go to alec young. he's at cnbc hq in the states.
hi, alec. good to see you. in some ways, was it the perfect number? if we had a number over -- much over 200,000, would investors have gotten worried that tapering was going to start earlier and would therefore have sold off? >> exactly, ross. i think it was sort of a goldilocks number. it was strong enough to allay fears of another summer soft patch because we had seen a bunch of pretty weak numbers leading into the payroll report. but by the same token, as you said, it certainly wasn't strong enough to rekindle those tapering fears. so i think it was just what the doctor ordered. >> if we've got a really weak number, less than 100,000, what would have happened? >> i think we would have had selling because it comes -- it would have come on the heels of a very weak manufacturing report. contracting versus expectations of about 51. also the employment component within the latest u.s.
manufacturing report was quite weak. the adp report was expectations. and factory orders have been weak. we've gotten a slew of pretty significant signs of weakening. and while that would have kept the fed in the game, had the payroll report been similarly weak, ultimately investors are buying a stream of earnings. and it's important to have a healthy underlying economic tone. so i think the -- you know, more goldilocks-type number i think was really more what investors wanted. >> let's be clear about this, alec. strong -- much stronger data means we sell off. mch we much weaker data means we sell off. is that sustainable? >> well, i mean, i think, you know, most of the time the data comes in in the middle. so extreme readings on either end are less frequent than more middle of the road type of readings. more in line with what the economists are expecting, which is exactly what we got on friday.
i don't know that it's, you know, unsustainable. we just need to see this gradual recovery continuing and ultimately we all know that the fed will be tapering their stimulus. but the hope is that that happens from a much healthier economic level. and therefore that equities can handle it better because they'll be more underlying momentum in the economy. i think for now it's morsteady growth, but we don't want anything too heeded. >> all right. alec, good to have you on. you're going to stick around. get a cup of coffee. i hope they look after you there. they do. they do a very good job when it's early in the morning. let's remind you what's on the agenda in the u.s. no economic data today. the key report of the week will be probably retail sales on thursday. mcdonald's does report its may same-store sales at around 8:00 eastern. as for earnings, look for results from yoga clothing maker
lululemon. annie's and auto parts retailer pep boys. texas instruments issues a midquarter update also after the close. now, a former cia employee claims he's the source who leaked details of the national security agency's top-secret surveillance programs to britain's "guardian." edward snowden was a technical assistant and says he worked for the nsa in hawaii as a consultant for contractor booz, allen, hamilton. snowden says he leaked the information on the prison program after becoming disenchanted with president obama who he says has simply continued the policies of george w. bush. >> i'm just another guy who sits there day to day in the office, watches what's happening, and goes, this is something that's not our place to decide. the public needs to decide whether these programs and policies are right or wrong.
>> and the office of the u.s. director of national intelligence wouldn't comment directly on snowden but has referred the case to the justice department and says the intelligence community is assessing the potential damage. booz allen confirmed that snowden worked for them for less than three months and says the reports of the leaked information are shocking. snowden's decision to go public could expose him to the wrath of u.s. authorities. he says he fears retribution. experts question why he fled to hong kong which has had an extradition treaty with the u.s. since 1998. and still to come on the program, with apple facing a possible ban on its older products in the u.s., will the tech giant be releasing new ones at its wwdc event today? we'll take a sneak peek later at what's expected. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone
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if you've just joined us, just to recap, former south african president mandela has returned to the hospital because of a recurring lung infection, prompting an outpouring of support from across the country. officials have described the 95-year-old's condition as serious but stable. nbc's key simmons is in johannesburg with the latest. keir, what do we know? >> reporter: good morning, ross. in fact, we've just had a statement from the south african
president's office that he describes mandela's condition as unchanged. this is the fourth time that he has been in the hospital since december, and it is the first time that doctors have described his condition as serious. though as you say, he is also described as stable and said to be able to breathe independently. in this statement that south african president jacob zuma called on the president to pray for mandela and his family. and over the weekend we saw some of his children and grandchildren going into the hospital in pretoria where we think nelson mandela is being treated for this recurrent lung infection. meanwhile, a longtime friend has said in a newspaper that it is time to let nelson mandela go. on the other hand, many people, of course, have seen nelson mandela go into hospital, recover and come back to his home here in johannesburg. and people across this country are praying and willing for him to do so again. ross? >> keir, thanks for that.
that's the latest from johannesburg. up to speed with developments on the former president mandela. meanwhile, let the second-guessing on chinas' economy begin. we've had weak may data which suggests mainland greatest stock led by weak trade figures that fell sharply from april. consumer inflakes also slowed with producer prices weakening even further. the silver lining, it could be that industrial output of retail sales met expectations. eunice is in beijing. eunice, we didn't trust the april trade numbers. so if we've got to fall back from that, i'm not sure what sort of context we're supposed to put this into. >> reporter: yeah, and especially because for these may numbers, a lot of people have been talking about how the government regulations and crackdown on some of these practices to try to kind of inflate the export numbers is one of the reasons why the may trade numbers -- the export numbers were so low. even with that in mind, you just think that the u.s. economy is recovering, but this may export number came in at 1% growth.
that's still paltry. the import numbers didn't look great either. they missed by a margin. because of that, people are saying that the domestic demand isn't robust here. the producer price numbers and the consumer prices also are showing some weakness. and what the producer prices, people are talking about how the overcapacity is still in the system. overall, the set of numbers were disappointing. people are saying that into the second quarter, we're probably going to see more of a slowdown. >> yeah. meanwhile, u.s. president barack obama and his chinese counterpart have ended their two-day sum knmit in california. we know cybersecurity topped that agenda. what has come out of that? what further understanding of this relationship do you think we've got? >> reporter: well, what was interesting here is seeing the chinese state press reaction. so far what we've been seeing is a really very rosy portrayal of the summit. a lot of people are focusing on this california redwood bench
that president obama had given to president xi. it basically is being held up as the symbol of how china and the u.s. are now sitting side by side, working together in order to try to -- working together as equals. so this is being held up as a symbol. there's a lot of discussion about it. and the whole point of the summit was really to try to reset the relationship, as you well know, it's been very difficult slog going between the u.s. and china. and what a lot of people had been hoping for going into the summit was that the nature of this relationship where it would become a more informal setting, where the two were going to be talking for eight hours and having direct talks, where they're going to be walking around the estates just the two of them with interprets but really nobody else for 50 minutes, that that would help soften them and help them build a personal relationship in order to navigate the relationship. so that's the hope. whether or not it works, another
question, but that's what people are hoping for at this point. >> meanwhile, eunice, we're all following edward snowden who's come out and said he's the chap who was behind the leaks, revealing the details of the nsa's prism program. he's in hong kong. a lot of people saying there's an extradition treaty between the hong kong and the united states. why has he gone there? what influence would china have on whether hong kong allows him to be extradited if the u.s. wants him? >> reporter: well, china -- the final buck actually stops with china and beijing. china has veto power over what hong kong decides. so hong kong and the united states do have an extradition treaty. you know, they would make their decisions on their own, but china does have that veto power. whether or not they're going to exercise it, probably unlikely. just because they really don't have any direct interest in this particular case. also, they probably wouldn't want to risk the political costs that they would see if they got
involved in hong kong's affairs. especially on these political issues. and also what was interesting is that this story, the way it's being covered in the state press, you could tell that it's very -- it's being covered in a very neutral way which suggests that beijing stedoesn't really t to get involved. what was interesting is how the chinese public on the internet has been reacting. there's been a lot of dark humor about this particular story saying isn't it ironic that we're now seeing an american seeking refuge in china for political freedom. >> yeah. because he's been revealing the government spying on its own people. right? i mean, the whole story. >> reporter: that's right. >> thanks for that. thanks for that, eunice. that's the latest out of beijing. and a recap of the headlines today. the nikkei enjoys a 5% bump in its session boosted by improved japanese gdpdata. weaker inflation in china. plus, an ex-cia worker says he's
the source of nsa leaks. edward snowden now holed up in a hong kong hotel room. those are the headlines. we're also focused on turkey. trading and financial markets has been volatile ever since anti-government protests broke out on may the 31st. following a delay this morning, the 100 opened down more than 2%. it's off 1.5% at the moment. the prime minister faced cheering supporters last night and vowed to choke financial market speculators. he's also urged turks to put their money in state rather than private banks. standing firmly against the demonstrations, he says his patience has limits and that the protests will not force him to give up power. also still to come, the stronger dollar's weight on commodities, is there any sign of a rebound? we'll have more with alec young when we come back. meanwhile, a reflection.
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u.s. equities ended up on the week last week. right now we are indicated higher. at the start of trade this week, the s&p 500 has implied two points higher. commodities today a little bit softer mainly across the board. nymex off. spot gold pretty flat, below 1400. copper down 1.2%. still with us is alec young, s&p capital i.q. there in the studio site. alec, what we've seen with the latest bout of u.s. policy is the dollar getting stronger. people deciding equities is the place to be. and commodities losing out. is that going to continue to be the case? >> well, there's a lot of cross-currents. i mean, as we, for a while, we were getting better than
expected u.s. data and investors were banking on the dollar being stronger because the u.s. would be the first one to sort of wind down stimulus relative to japan who's still being very aggressive and europe where there's more stimulus expected. but, you know, a lot of those perceptions shift as the economic numbers come in. for example, last week, the dollar had a very rough week. the ecb signaled they were in no hurry to do any more easing at least near term. and some of the u.s. data was quite weak which had people backing away from an early end to stimulus. i think we expect the currencies to stay, you know, fairly volatile. the dollar has had about a 4% gain this year on a trade-weighted basis. it may, you know, hold current levels. but i think some of the overseas currencies are going to be a little firmer. in the uk, people are being baiba i backing away. so the pound's been a little
firmer. certainly the euro a little firmer. so i think the dollar's gains may be tough to match going forward. as far as commodities go, i think the ones that are most focussed on china like copper, for example, are really most vulnerable here. oil's been a little bit steadier given that people do expect u.s. demand to pick up as the u.s. recovery gains steam heading into next year. whereas the momentum in china seems to be more on the down side. so i think more of the cyclical asian exposed commodities may be more vulnerable than some of the more global commodities where the u.s. and maybe a recovery in europe are bigger players. >> it's interesting, isn't it, when you look at australia's underperformed, brazil, russia have certainly underperformed other emerging markets. nearly all the other emerging markets as well. i mean, there's that resource
element is very strong. i just wonder whether on the balance, you think they will continue to underperform. >> yes. i mean, i think whether it's canada, australia, the commodity complex broadly doesn't look like it's going to be a source of outperformance any time soon. and obviously, the heavily commodity exposed equity markets that you mentioned i think would fall under that banner as well. >> all right. stay there, alec. we'll come back to you for another chunk. also with apple facing a possible ban on its older products in the u.s., will the tech giant be releasing new ones at its wwdc event today? we'll take a sneak peek at what we might get. and this comes as a new study suggests if you want a good night's sleep, it's best to keep ipads, smartphones, everything well away from the bedroom. is your bedroom a tech-free
sanctuary? it's not a good idea. if you want to join the information, e-mail us, worldwide@cnbc or @rosswestgate. we'll be right back. overmany discounts to thine customers! [old english accent] safe driver, multi-car, paid in full -- a most fulsome bounty indeed, lord jamie. thou cometh and we thy saveth! what are you doing? we doth offer so many discounts, we have some to spare. oh, you have any of those homeowners discounts? here we go. thank you. he took my shield, my lady. these are troubling times in the kingdom. more discounts than we knoweth what to do with. now that's progressive. riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks...
the biggest gain in more than two years. boosted by improved japanese gdp. but european stocks have been lagging that performance, concerned by weaker trade data out of china. coming forward, a former cia employee says he's the source behind the leak of information on the u.s. government's top-secret surveillance programs. stephon bernard, the ceo of french telecom's group orange has been taken into custody for questioning in his role in an arbitration scandal. after a controversial 285 million euro payout. the turkish stock market falls at the open despite a warning from the prime minister that he will choke financial speculators as his patience with protests is running out. you're watching "worldwide exchange," bringing you business news from around the globe. >> and if you've just joined us
today, good morning. welcome to the start of your global trading week here on cnbc. we closed up higher for the week for u.s. indices. we are a little higher at the start of trade for this week as well. the s&p just over 2 points above fair value. the nasdaq is around about 1.5 fair value. the dow higher but only around 17 points or so. the ftse global 300, as you can see, has nudged a little higher, just by around 4 points. european equities have been somewhat mixed. the ftse 100 last week was down 2.6%. it's completely flat at the moment. the dax, 0.8%. we've had weak chinese data, trade data coming in for may, weaker than expected and inflation was down as well. the cac is fairly flat, as you can see. so the start of this new week, here's a recap of some of the
thoughts we've already had on cnbc today. >> emerging market inflation bonds and in local currency, you've got 5% inflation across emerging markets, that's going to be much stickier than consensus, i believe. if you have weak currencies especially, you're going to have more inflationary pressures. so you get a nice offset if you've got local currency and the inflation link. >> we think effectively it's staying stable and within the range even on, already slowing expectations of gdp growth in china. now, china was around a million barrels a day. that's coming down very sharply. we're not really seeing in terms of the trade data any real slowdown. >> for some time has been defensive and income orientated, which has obviously served our
bonds very, very well. right now we're looking to rebalance that and add to cyclicals to kind of neutralize that so overweight defenses. just on a valuation basis, the likes of rio, bhp, the banks. now, the annual apple worldwide developers conference calmly abbreviated wwdc is taking place in san francisco today. and the rumor mill is in full swing ahead of that event. tech heads expecting new operating systems as well as a fresh macbook air. the company may also announce a new internet radio service and an iphone trade-in program. tom is in new york and still with us, of course, alec young, global equities strategist at s&p capital iq. tom, good to see you. thanks very much indeed for joining us. look, how much is different from last year for apple? >> actually, there's a lot of difference from last year.
the company had tremendous momentum last year going into the launch of the iphone 5. they've stumbled of late. they had the patent loss to samsung. google has a lot of operating momentum and tax issues on capitol hill. very different this year for apple. >> this becomes a more important event. but are we going to see anything of great import? >> sure. very important event. and really i think it's an opportunity for them to recapture the spotlight in a positive means. their ecosystem is still very valuable. i anticipate at the minimum seeing an update or preview of their upcoming operating systems both for the desk stotopdesktop perhaps the new radio service. don't anticipate much on the hardware side, but really an opportunity for apple to show that their ecosystem is still quite robust and in very good shape. >> software, though, doesn't really catch the consumers' eye, does it? i mean, you say no hardware.
consumers don't really care much about -- i mean, they care about software. they like the thing that it works, but it doesn't catch the headlines for them, does it? >> well, you know, if you look at google, google maps versus what apple did with apple maps, there are times when software is in the spotlight. so i do think that they have an opportunity to show that they have good things brewing and that they're past the challenges th they faced with their maps. >> do you think -- there's always a focus on tim cook. do you think he's got any regrets about the last year? >> i think that he's handled a lot of the challenges admirably. i think that to the extent that he was able, i think maybe he could have pushed forward some of the product development. so you basically didn't have this gap where you had no new product news for an extended period of time which i think puts apple in a very defensive positi position. >> alec, i don't know if you have any thoughts on apple because this time last year, you had a much bigger impact, of
course, on the s&p 500 in terms of the stock. what do you think now? >> well, i mean, i think just from a macro perspective, obviously we have an analyst that covers the stock bottom up. i think he's got a strong buy. just from a macro perspective, apple's still worth about 3% of the s&p 500. it's about 20% of the s&p 500 technology sector. and you know, it's a stock that's on its back a little bit, you know, down 35%, 40% from the peak. so if we could see some upward momentum in apple, the s&p would be better off for it. it is one of the few stocks that does have the potential to move the entire stock market, if it can get on a bit of a run. so you know, hopefully they can, you know, improve the news flow a little bit here. i think the overall market would benefit from it. >> yeah. so tom, is, in your view, the news flow going to be good enough? >> i do think so. so if you look at the fact that
we should have product announcements coming in the fall, and now you have today's developers conference, i think there's an opportunity for apple to start turning the tide to work in its favor. >> just finally, you talked about -- is there any saving -- you talk about the mac business. is there anything that's going to save the mac business, or is it going the way of other products like the ipod? >> i think what's going to drive apple is going to be tablets. and some of that growth could come at the expense of the mac line. but to the extent that they're going to remain a very strong player within the pc market, i think is a net positive. but definitely we're heading to the world of the post-pv mark - market. >> tom forte, managing director, alec, thank you. good to have you. have a good week. alec young. now, earlier as well, we've been asking a question, is your bedroom a tech-free sanctuary or
a late-night logon too much? it stops you sleeping deeply. rick tweeted his bedroom will never be internet free but may have free internet. sorry, i butchered that slightly. very good. some other tech stories, google is reportedly close to a deal to buy ways for $1.3 billion. this is the israeli mapping start-up. facebook also in the mix reportedly willing to pay up to $1 billion. it's a source to gps device which drivers rely on information provided by its more than 47 million members to create its maps. google stock up 0.5%. carl icahn has reported they have a short list of candidates to be the next ceo. if they succeed in their proxy battle against michael dell and
partners. the list includes oracle president mark hurd. they've proposed a $24.4 billion buyout of the company. icahn and southeastern's offer would pay a $12 a share special dividend and let dell shareholders keep their holdings. and in the telecom sector, stocks of japanese mobile carrier soft bank jumped nearly 10% after reports that the firm is in talks with deutsche telecom on acquiring a stake in t-mobile usa. we'll keep our eyes on that. at the same time, the coo of orange has gone into custody in france. stefan richard and our very own stefan has the details. stefan? >> reporter: yes, richard is currently being questioned in paris as part of the corruption probe. he's being questioned not as the ceo of france telecom but as the former head of the cabinet of
christine lagarde when she was finance minister. back in 2008, lagarde chose a prosecutor to settle a legal dispute between the controversial businessman bernard tapie. she decided to go ahead with the arbitration despite the objection from some government advisers. as a result, the french state paid more than 200 million euros to bernard tapie. prosecutors want to know if lagarde took the decision herself or if she was instructed to do so by the former president nicolas sarkozy who was supported by bernard tapie. three weeks ago lagarde was questioned in france by a special high court after two days of hearing. she was not placed under formal investigation but under the stages of assisted witness. we will know tonight or perhaps tomorrow if she'll be placed under formal investigation. but as the presumption of innocence revails in france, even if he's placed under formal
investigation, richard will not have to step down from france telecom because of the presumption of innocence. france telecom, by the way, will change its name into orange as the first of july. ross. >> the whole of france telecom's -- >> france telecom will become orange. until now, orange was the name -- yes, orange was the name for the mobile phone services. but now all the group will be named orange. >> orange uk start-up. >> reporter: yeah. >> all of france telecom is going to take a name that was conjured up for a british company. i'm just saying. >> reporter: it's sexier. hello, france telecom sounds like a very '80s company. >> they could have called it ft. oh, no, hang on. see, british telecom became bt. >> reporter: yeah. >> i just think it's interesting they're dropping the word "france."
>> reporter: yeah, but orange was a sexy name. you know, they invested so much in communication into the orange name that now they want probably to capitalize on that name. so it makes sense to change. >> i find that notable. thanks for that, stefan. still to come, more on the man who claims he's the source behind the leaks on the u.s. government's secret phone and internet surveillance programs. "worldwide exchange" continues in just a few moments. with the spark miles card from capital one, bjorn earns unlimited rewards for his small business. take these bags to room 12 please. [ garth ] bjorn's small business earns double miles on every purchase every day. produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less? ahh, oh! [ garth ] great businesses deserve unlimited rewards. here's your wake up call. [ male announcer ] get the spark business card from capital one and earn unlimited rewards. choose double miles or 2% cash back on every purchase every day. what's in your wallet? [ crows ] now where's the snooze button?
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a recap of the headlines. the nikkei enjoys a 5% bump in its session boosted by improved japanese gdp. weaker trade and inflation out of china has weighed a little bit on european stocks. and an ex-cia worker says he's the source of nsa leaks. edward snowden is now holed up in a hong kong hotel room. and picki ining up on that story, we now hear that the german chancellor, angela merkel, is going to raise prism, the prism program, in talks with the president according to a german government spokesman. this is after the former cia employee claimed he's the source who leaked details of the national security's top-secret
surveillance programs to "the guardian" newspaper. jackie deangelis has more from cnbc hq in the states. >> reporter: good morning. this story continues to grow more complex. his name is edward snowden, 29, and was a former technical assistant at the cia. snowden says he worked for the nsa in hawaii as a consultant for a government contractor booz allen hamilton. "the garden" says he told his supervisor he needed time off for treatment of epilepsy. he's been holed up in a hotel. in an interview with "the guardian," snowden says he acted out of conscience, leaking information after becoming disen chanted with president obama who he says continued policies of george w. bush. >> i'm just another guy who sits there day to day in the office, watches what's happening, and
goes, this is something that's not our place to decide. the public needs to decide whether these programs and policies are right or wrong. >> now, "the guardian" says that snowden sought to be identified as the source of the leak. he says that he fears retribution from the u.s. government but thinks that the publicity his revelations have had generated it's worth the risk. >> you can't come forward against the world's most powerful intelligence agencies and be completely free from risk because there's such powerful adversaries. that no one could meaningfully oppose them. if they want to get you, they'll get you in time. but at the same time, you have to make a determination about what it is that's important to you. >> now, booz has confirmed that snowden worked for them for less than three months and says that reports of the leaked information are shocking. in a statement, the office of the director of national intelligence wouldn't comment directly on snowden.
in an interview with nbc news on saturday, james clapper says that the intelligence community is assessing the potential damage. >> this is someone who, for whatever reason, has chosen to violate a sacred trust for this country. the damage that these revelations incur are huge. >> snowden's decision to go public could expose him to the wrath of u.s. authorities on the level of army private bradley manning who passed classified files to wikileaks. legal experts question his decision to flee to hong kong which has had an extradition treaty with the u.s. since 1998. it would allow hong kong to hold snowden for 60 days while the u.s. prepares a formal request. and ross, as i said at the beginning of this report, it continues to grow more complex, this story. we'll be watching it very closely. back to you. >> what will be fascinating will the opinion polls on this, jackie. people will say, is he a patriot? is he a traitor?
that debate, i'm sure, is kicking off. >> and i'm sure that will blow up online as well with social media and everything else. >> yeah. i'm pleased you mentioned that. yeah, a couple of stories that are worth checking out on cnbc.com. thank you, jackie. before we head to break, the volatility that has characterized japanese markets this year is about to come to an end according to analysts. find out why some of them are turning bullish to abenomics. it might be a different story store china. a new report suggests the country's downturn may be the most drawn out. that story as well and why sentiment is souring on china also online. you can also follow us on twitter @cnbcworld. u.s. markets have rallied but not a great jobs report on friday. what will be the next catalyst? we'll preview the trading week ahead coming up. [ male announcer ] i've seen incredible things. otherworldly things.
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all right. ahead of the u.s. open, european markets have turned around bit. the dax up all morning. the ftse has flirted either side of the flat line. it was down 2.6% last week. the ftse is italy is down a quarter. we're flat for the cac. as far as japan is concerned, just worth pointing out, and that market was up nearly 5% today. we'll look at that as well in a few seconds. meanwhile, let's remind you what's on the agenda in the united states. no economic data today, but the key report of the week wile likely be may retail sales thursday. mcdonald's reports same-store sales around 8:00 eastern. look for results after the close from yoga clothing maker lululemon. organic food producer annie's and pep boys.
texas instruments issues a midquarter update after the close. futures, after gains last week, for the dow up 0.9%, currently 19 points above fair value. the nasdaq at the moment about 2 points above fair value. the s&p 500 is nearly 3 points above fair value. i mentioned the nikkei. let's just show you what happened there. a pretty good day, 4.94%. the dollar also strengthened against the yen. we hit 94.98 on friday. now we're well into the 98s. senior market analyst at trading advantage joins us with his thoughts. allen, here we go, it's the monday after the payrolls report on friday. did that soothe us? it was neither too hot, nor too cold. sort of the perfect porridge. >> i think you're exactly right there. what i liked last week, what was a textbook flush-out that the market needed. everybody had been talking about waiting for the market to sell off 5%.
but the funny thing was, not a lot of people had the psychology to step up when it was down 5% because they thought it was going to go lower. as you alluded to in the earnings, we're in a weird spot because we're at the end of earnings season. the next quarter doesn't kick off till july 8th. and we've seen this before where the market has this uneasiness and uncertainty going you into the next quarter wondering, can we do it again? and you know, we've done this now for the last four or six quarters and overachieved. so we'll look to see what happens very soon. >> history's not on our side. since 2000, june has been the worst performing month with september, if my memory serves me right. june is a tough month anyway. >> yeah. i don't think the market pays attention to the calendar as much as we do. but looking at things technically, that selloff that we saw in the s&p, the 90-point selloff, we're back among the m midpoint of that drawdown.
we get back up to the level in the s&p, if you project that 90 points on top, we could get to 75 in the s&p, another 8% higher where we are now. and i'm getting encouraging signs. we saw bonds push up in yields to the highest point that wooe se we've seen in a year. you're seeing treasuries hold there. and also, the big indicator for me is the dollar index. the dollar index has finally turned over after making 2 1/2-year highs recently. it's held below 83. so you're seeing a lot of unwinding. and for the euro currency, it's been trading between 128 and 132. that target's 136. so that unwinding of the safety dollars and safety bonds could be the next catalyst for the stock market as well as earnings in a month. >> i thought the dollar was going to go up with equities. i thought it was going to be a growth yield story. >> well, the dollar -- you saw that major flight to quality over the past couple years. every time we get another bout
of issues in europe, the dollar is the safety currency, as much as people bad-mouth is. and here recently, it's seen a little unwinding. it kind of goes against common sense. everybody thinks the dollar is very weaks you because of the printing press theory. but in reality the dollar has maintained its value. over the past 25 years, we've had a weak dollar policy because that helps corporations, obviously. maybe a little bit of weakness here can help out the stock market, give it another leg higher. nothing's stopping this train. and we'll have to continue to see if we can make new highs. it will be important to see if we can get back up to those highs in the next couple weeks ahead of earnings as we've seen in past quarters. >> allen lr, thanks for joining from chicago. still to come on "squawk," michelle ka reduusseduce michelle caruso-cabrera.
good monday morning. today's top story, we've got an overnight rally in japan. the nikkei soaring 5% on a strong gdp revision and a weaker yen. in the u.s., equities are pointing to positive opening on wall street. and the story, of course, that everybody is buzzing about this morning, a 29-year-old former cia worker says he was the leak behind the internet and telephone surveillance. it is immune, jumonday, june 10. "squawk box" begins right now. ♪ i always feel like somebody's watching me ♪ ♪ and i have no privacy good morning, everybody. welcome to "squawk box." i'm becky quick along with
andrew ross sorkin. joe is off today, but we are thrilled to be joined by a terrific trio of reporters. we have reuters dan collaruso, joe wisenthal and ben white. they are all ready to tackle the big stories. first up, the nikkei bouncing back from a two-month low. japan's benchmark index rising 5% to close at a session high. you may think this is a huge deal. it is to a certain extent, but boy, have we seen some volatility in the nikkei. we've been watching this market really closely over the last couple weeks, and it almost is starting to feel like big moves like this are standard plays. there was a revised gdp that surpassed market forecasts. analysts say the data confirmed abe's policies are strengthening the economy. the financial markets in china were closed for a public holiday today, but there was